ACT government's stamp duty reprieve extended for buyers purchasing off-the-plan properties up to $600,000
The ACT government has extended its stamp duty scheme by removing stamp duty from off-the-plan property purchases up to $600,000.
It's a step intended to ease the pressure for those looking to buy in the territory's soaring market, which saw prices skyrocket during the pandemic.
In the 12 months to September 2021, the median ACT dwelling prices shot up 22.5 per cent — Canberra's house and unit prices are now second only to Sydney's.
ACT Chief Minister Andrew Barr said the new duty free threshold could save buyers more than $15,000 when purchasing a new home.
"The government is continuing to remove inefficient taxes on properties at the entry level of the housing market to make it easier for Canberrans to purchase their first home or downsize to a property that better suits their needs," he said.
"These tax incentives are also designed to encourage an increased supply of new properties below the duty threshold."
The move expands on the government's stamp duty scheme introduced last year for properties of up to $500,000, and will begin on April 1, 2022.
Mr Barr said the extension of the scheme was "a signal to the supply side to build more properties under $600,000".
"So it's not chasing the existing housing stock, it's requiring new housing to be built, which adds to the supply side of that supply and demand interaction," he said.
Extension made amid 'unprecedented interest' in new homes
Master Builders Association (MBA) chief executive Michael Hopkins said the 20 per cent increase in the threshold would "incentivise new residential constructions".
"It provides not only a benefit for those looking to enter the market below $600,000, but it's also providing a stimulus for the building industry which employs around 20,000 people in the ACT," Mr Hopkins said.
However, he said it would "make more sense" for the scheme to be extended to all residential sales, including vacant residential land, rather than just off-the-plan properties.
"It would certainly have more impact if it were to include vacant residential land sales in future years," he said.
Mr Hopkins said the government's initiatives to improve the supply of housing should include offering more land for single-detached dwellings.
Last month the latest release of land at Canberra's newest suburb Macnamara attracted unprecedented interest, with 8,700 prospective homebuyers vying for 71 parcels of land through a ballot.
"We've seen some incredible interest in new land releases where there's around 100 people per block registering their interest, showing that clearly the government is not supplying enough housing to the Canberra market," Mr Hopkins said.
"We think it's important that the government's housing policies are aimed at supplying a range of affordable housing, not just new units and apartments."
'Canberra can't sprawl outwards forever'
Mr Barr said that the stamp duty policy was focused on "the 80 per cent of the housing market that is within the existing city footprint".
"Canberra can't sprawl outwards forever," he said.
"There are obvious geographic boundaries; we can't develop in our water catchment, that would be insane. And there are massive costs associated with endless urban sprawl.
"I think so much of the debate is skewed as if no one ever wants to live in in a town centre. Obviously tens of thousands of people do, and it is a viable and quite legitimate choice for people to make. And this initiative does support that choice."
While he acknowledged the government's objective to have more people living in apartments and units, Mr Hopkins said housing needs for large families should be considered, too.
"That means providing a mix of units, apartments, and single-detached housing," he said.
"Land for single-detached housing is an important part of the overall housing mix and it's clearly in high demand in the ACT at the moment.
"And because there's such restriction on supply for single-detached housing — it's the main reason why we're seeing such exorbitant price increases for new single residential land at the moment."
However, Mr Barr said that removing stamp duty for off-the-plan properties would also free up already existing larger homes from people who were downsizing.
"It's very clear when you are asked what the barriers are to downsizing, among them is the transaction costs, the stamp duty," he said.
"So every person who downsizes out of a larger family home into something smaller, that frees up that family home for a growing family."
A 'modest change' for buyers
Greg Weller from the Housing Industry Association said the increase in the stamp duty threshold was a "modest change", though welcome.
"While this measure itself probably can be best described as modest, as an overall policy to remove stamp duty, I think it is part of a big picture that is a positive for not just the economy, as well as the home owners," he said.
"It's certainly a cost that is not going to be borne by home buyers, and when we look at the ACT across the rest of the nation, we are leading the way. There are not many jurisdictions that are paying less stamp duty than us.
"I think as an overall picture it is good, but unfortunately, we have seen, for various reasons, significant increases in the cost of housing. So quite often, the benefit is swallowed up by changes."
Like Mr Hopkins, Mr Weller said the supply of housing was still a significant issue for the territory.
"This policy on its own I don't think will impact on a lot of people," he said.
"We often do see, unfortunately, when a government sets the thresholds for support measures quite often they tend to lag a little bit behind what the market is actually doing, and so it does create some limitations as well.
"If we can get more housing, that's certainly something that can at least reduce some of the pressure."
Mr Weller suggested the release of more greenfields land for detached housing could make a difference to the territory's supply, as well as multi-residential housing developments.
"Ultimately it comes down to decisions that the government makes about collection of revenue," Mr Weller said.
"The government has made a policy decision to limit the amount of greenfield land, but also we think in terms of some of the medium-density housing, we could be doing a lot more within our existing suburbs to increase the amount of housing.
"We think the government can do a lot more in terms of the lease variation charge as well — a lot of existing land, for it to be developed, has some fairly hefty charges put on top of it, which then goes straight through to the home buyer as well.
"So there are a lot of levers that government can pull."